Sunday, November 30, 2008

In a recent case in the Southern District of New York, Yurman Studio, Inc. v. Castaneda, 07 Civ. 1241 (SAS)(S.D.N.Y. November 19, 2008), District Judge Shira A. Scheindlin reminds us of the well settled principle that "At the end of the day, 'statutory damages should bear some relation to actual damages suffered' [citing RSO Records v. Peri, 596 F.Supp. 849,862 (SDNY 1984); New Line Cinema Corp. v. Russ Berrie & Co., 161 F.Supp.2d 293,303 (SDNY 2001); 4 Nimmer Sec. 14.04[E][1] at 14-90(2005)] and 'cannot be divorced entirely from economic reality'"

The damages disproportion and economic reality disconnect in RIAA cases were recognized in the September 24, 2008, dictum of District Judge Michael J. Davis, set forth at pages 40-43 of the Court's decision (pdf) in Capitol v. Thomas, where Judge Davis observed that the statutory damages awarded were "wholly disproportionate", and urged Congressional action to prevent a recurrence. While we agree that Congressional action would be nice, we think it is clear that copyright jurisprudence itself prevents the outlandish damage awards sought by the RIAA.

The lessons to be learned from Yurman, and the body of law upon which it rests, are:

(a) it is necessary to obtain pretrial discovery into the plaintiffs' actual damages,

(b) the RIAA's outlandish theories for recovery of from 2,600 to 450,000 times plaintiffs' actual damages are inconsistent with the main body of copyright law, and cannot be allowed;

(c) the RIAA's allegation of a single copyright violation -- i.e. the use an "online media distribution system" -- should be treated as a single act of copyright infringement, and the award should be limited to a maximum of $750 in statutory damages, total, or $200 if the infringement was innocent; and

(d) as an alternative to (c), the maximum award of statutory damages should be nine (9) times the actual damages proved by plaintiffs to have been sustained, which would limit recovery to a range of from zero to $3.15 per song file (typically, lost profits are approximately 35 cents per song file).

The Courts should recognize that any other interpretation of the Copyright Act would lead to an inescapable conclusion that the statute is unconstitutional.

We should also be mindful of the rule that no statutory damages at all are recoverable if the complaint alleges (as the RIAA complaints do allege) an ongoing course of copyright infringement, for any recordings whose effective date of copyright registration is later than the date the defendant's ongoing course of copyright infringement began. 17 U.S.C. Sec. 412. See, e.g., Homkow v. Musika Records, Inc., 2008 U.S. Dist. LEXIS 14079 (S.D.N.Y. February 26, 2008); Irwin v. ZDF Enters. GmbH, 2006 U.S. Dist. LEXIS 6156 (S.D.N.Y. 2006); Shady Records, Inc. v. Source Enters., 2004 U.S. Dist. LEXIS 26143 (S.D.N.Y. 2004). As to those song files, only the actual damages are recoverable. (Example: Plaintiffs' allegations are that defendant used an online media distribution system to download and/or distribute plaintiffs' songs without permission on a continuing basis. Plaintiffs' proof is to the effect that defendant began using Kazaa on November 1, 2006; defendant used it to download copyrighted song files A through F without permission, during the period January 1, 2007, to December 31, 2007; the copyright registration effective date for song file A is October 1, 2006; the copyright registration effective date for song file B is December 1, 2006; the copyright registration effective dates for song files C through F are in 2007. Plaintiffs can recover statutory damages for Song File A only, and are relegated to actual damages only for song files B through F.)

Friday, November 28, 2008

In a Cleveland, Ohio, case targeting students at Case Western Reserve University, Arista Records v. Does 1-11, the District Court has granted the defendant John Doe #9's motion for severance, and severed as to Doe #9 and all other defendants except John Doe #1.

District Judge Kathleen O'Malley rejected the RIAA's argument that severance was premature, agreed with the authorities that had granted severance, and dismissed the authorities cited by the RIAA as providing insufficient analysis, explanation, or rationale.

In Fonovisa, Inc. v. Does 1-9, a Pittsburgh, Pennsylvania, case targeting Carnegie Mellon students, in which a student -- appearing pro se -- succeeded in challenging the misjoinder of John Does, but failed to get dismissal of the complaint or quashing of the subpoena, the Magistrate Judge's ruling has now been affirmed by the District Court Judge.

Warner Bros. Records v. Cassin, the Westchester case challenging the "making available" theory, has been settled. A notice of dismissal without prejudice of the 2nd phase of that case, the case against the "John Does", was filed today.

Tuesday, November 25, 2008

As you know, on November 24th, in one of the "John Doe" cases targeting Boston University, consolidated under the heading London-Sire Records v. Does 1-4, after the university advised the Court that it could not identify John Does #8, 9, and 14 to a reasonable degree of technical certainty, Judge Nancy Gertner deemed the letter a motion to quash, and granted it, quashing the subpoena as to those defendants:

The Court treats Boston University's 9/23/08 Letter as a Motion to Quash and GRANTS the motion with respect to Doe Defendants # 8, 9, and 14. The University has adequately demonstrated that it is not able to identify the alleged infringers with a reasonable degree of technical certainty. As a result, the Court finds that compliance with the subpoena as to the IP addresses represented by these Defendants would expose innocent parties to intrusive discovery. Accordingly, under the test laid out in its 3/31/08 Order, the Court declines to authorize discovery and quashes the subpoena as to Does # 8, 9, and 14.

(emphasis supplied) We have been saying this for years. It is refreshing to see it finally recognized in a decision. Interestingly, it occurred in an undefended case, where no "John Doe" appeared. The Court, however, deemed the University's letter explaining the identification problem a motion to quash, and granted it.

The reason we believe this little, 4-sentence, decision is so important is that if the principle it enunciates is followed consistently by Judge Gertner and by other judges, very few, if any, RIAA subpoenas will withstand a motion to quash going forward. E.g., if this principle had been followed in Arista Records v. Does 1-17 targeting University of Oregon students, or in LaFace Records v. Does 1-14 targeting University of Arizona students, in both of which the university's plea fell on deaf ears, the respective subpoenas would have been quashed as to all, or at least most, of the students.

Accordingly, I urge every practitioner who is consulted by a John Doe defendant, and is contemplating a motion to vacate the ex parte discovery order and quash the subpoena issued under it -- whether through a college or university or through a commercial internet service provider -- to give careful consideration to the November 24, 2008, decision in London-Sire Records v. Does 1-4.

And I urge every college and university counsel, and internet service providers' counsel, to consult with your technical staff and recognize that Judge Gertner's decision implies a responsibility on your part, on behalf of your students and subscribers, to advise the respective courts from which the subpoenas have been issued, before making disclosure to the RIAA, as to which, if any, "alleged infringers" can be identified "with a reasonable degree of technical certainty", as Boston University did, so that the Court can pass upon the question .

Monday, November 24, 2008

In one of the "John Doe" cases targeting Boston University, consolidated under the heading London-Sire Records v. Does 1-4, after the university advised the Court that it could not identify John Does #8, 9, and 14 to a reasonable degree of technical certainty, Judge Nancy Gertner deemed the letter a motion to quash, and granted it, quashing the subpoena as to those defendants:

The Court treats Boston University's 9/23/08 Letter as a Motion to Quash and GRANTS the motion with respect to Doe Defendants # 8, 9, and 14. The University has adequately demonstrated that it is not able to identify the alleged infringers with a reasonable degree of technical certainty. As a result, the Court finds that compliance with the subpoena as to the IP addresses represented by these Defendants would expose innocent parties to intrusive discovery. Accordingly, under the test laid out in its 3/31/08 Order, the Court declines to authorize discovery and quashes the subpoena as to Does # 8, 9, and 14.

I am a business lawyer in New York City, practicing at Ray Beckerman, P.C.. The purpose of this site is to collect and share information about the wave of sham "copyright infringement" lawsuits started by four large record companies, and other areas of concern to digital online copyright law, and to internet law in general. -Ray Beckermanbeckermanlegal.com(Attorney Advertising)

"[T]he Court is concerned about the lack of facts establishing that Defendant was using that IP address at that particular time. Indeed, the [complaint] does not explain what link, if any, there is between Defendant and the IP address. It is possible that Plaintiff sued Defendant because he is the subscriber to IP address .... As recognized by many courts, just because an IP address is registered to an individual does not mean that he or she is guilty of infringement when that IP address is used to commit infringing activity." -Hon. Barry Ted Moskowitz, Chief Judge, S.D. California. January 29, 2013, AF Holdings v. Rogers"The complaints assert that the defendants – identified only by IP address – were the individuals who downloaded the subject “work” and participated in the BitTorrent swarm. However, the assumption that the person who pays for Internet access at a given location is the same individual who allegedly downloaded a single sexually explicit film is tenuous, and one that has grown more so over time." - Hon. Gary R. Brown, Magistrate Judge, E.D.N.Y. May 1, 2012, K-Beech v. Does 1-37"The concern of this Court is that in these lawsuits, potentially meritorious legal and factual defenses are not being litigated, and instead, the federal judiciary is being used as a hammer by a small group of plaintiffs to pound settlements out of unrepresented defendants."-Hon. S. James Otero, Dist. Judge, Central Dist. California, March 2, 2007, Elektra v. O'Brien, 2007 ILRWeb (P&F) 1555"The University has adequately demonstrated that it is not able to identify the alleged infringers with a reasonable degree of technical certainty...[C]ompliance with the subpoena as to the IP addresses represented by these Defendants would expose innocent parties to intrusive discovery....[T]he Court declines to authorize discovery and quashes the subpoena as to Does # 8, 9, and 14" -Hon. Nancy Gertner, Dist. Judge, Dist. Massachusetts, November 24, 2008, London-Sire Records v. Does 1-4"[C]ounsel representing the record companies have an ethical obligation to fully understand that they are fighting people without lawyers... that the formalities of this are basically bankrupting people, and it's terribly critical that you stop it...." -Hon. Nancy Gertner, Dist. Judge, Dist. Massachusetts, June 17, 2008, London-Sire v. Does 1-4"Rule 11(b)(3) requires that a representation in a pleading have evidentiary support and one wonders if the Plaintiffs are intentionally flouting that requirement in order to make their discovery efforts more convenient or to avoid paying the proper filing fees. In my view, the Court would be well within its power to direct the Plaintiffs to show cause why they have not violated Rule 11(b) with their allegations respecting joinder. [I]t is difficult to ignore the kind of gamesmanship that is going on here.....These plaintiffs have devised a clever scheme... to obtain court-authorized discovery prior to the service of complaints, but it troubles me that they do so with impunity and at the expense of the requirements of Rule 11(b)(3) because they have no good faith evidentiary basis to believe the cases should be joined." -Hon. Margaret J. Kravchuk, Magistrate Judge, District of Maine, January 25, 2008, Arista v. Does 1-27, 2008 WL 222283, modified Oct. 29, 2008"[N]either the parties' submissions nor the Court's own research has revealed any case holding the mere owner of an internet account contributorily or vicariously liable for the infringing activities of third persons.....In addition to the weakness of the secondary copyright infringement claims against Ms. Foster, there is a question of the plaintiffs' motivations in pursuing them..... [T]here is an appearance that the plaintiffs initiated the secondary infringement claims to press Ms. Foster into settlement after they had ceased to believe she was a direct or "primary" infringer." -Hon. Lee R. West, District Judge, Western District of Oklahoma, February 6, 2007, Capitol v. Foster, 2007 WL 1028532"[A]n overwhelming majority of cases brought by recording companies against individuals are resolved without so much as an appearance by the defendant, usually through default judgment or stipulated dismissal.....The Defendant Does cannot question the propriety of joinder if they do not set foot in the courthouse." -Hon. S. James Otero, Central District of California, August 29, 2007, SONY BMG v. Does 1-5, 2007 ILRWeb (P&F) 2535"Plaintiffs are ordered to file any future cases of this nature against one defendant at a time, and may not join defendants for their convenience."-Hon. Sam Sparks and Hon. Lee Yeakel, District Judges, Western District of Texas, November 17, 2004, Fonovisa v. Does 1-41, 2004 ILRWeb (P&F) 3053"The Court is unaware of any other authority that authorizes the ex parte subpoena requested by plaintiffs."-Hon. Walter D. Kelley, Jr., District Judge, Eastern District of Virginia, July 12, 2007, Interscope v. Does 1-7, 494 F. Supp. 2d 388, vacated on reconsideration 6/20/08"Plaintiffs contend that unless the Court allows ex parte immediate discovery, they will be irreparably harmed. While the Court does not dispute that infringement of a copyright results in harm, it requires a Coleridgian "suspension of disbelief" to accept that the harm is irreparable, especially when monetary damages can cure any alleged violation. On the other hand, the harm related to disclosure of confidential information in a student or faculty member's Internet files can be equally harmful.....Moreover, ex parte proceedings should be the exception, not the rule."-Hon. Lorenzo F. Garcia, Magistrate Judge, District of New Mexico, May 24, 2007, Capitol v. Does 1-16, 2007 WL 1893603"'Statutory damages must still bear some relation to actual damages." Hon. Michael J. Davis, Dist. Judge, U.S.District Court, Dist. Minnesota, January 22, 2010, Capitol Records v. Thomas-Rasset"[T]his court finds that defendants' use of the same ISP and P2P networks to allegedly commit copyright infringement is, without more, insufficient for permissive joinder under Rule 20. This court will sever not only the moving defendants from this action, but all other Doe defendants except Doe 2." -Hon. W. Earl Britt, District Judge, Eastern District of North Carolina, February 27, 2008, LaFace v. Does 1-38, 2008 WL 544992"[L]arge awards of statutory damages can raise due process concerns. Extending the reasoning of Gore and its progeny, a number of courts have recognized that an award of statutory damages may violate due process if the amount of the award is "out of all reasonable proportion" to the actual harm caused by a defendant's conduct.[T]hese cases are doubtlessly correct to note that a punitive and grossly excessive statutory damages award violates the Due Process Clause....."Hon. Marilyn Hall Patel, Dist. Judge, N.D. California, June 1, 2005, In re Napster, 2005 US DIST Lexis 11498, 2005 WL 1287611"[P]laintiffs can cite to no case foreclosing the applicability of the due process clause to the aggregation of minimum statutory damages proscribed under the Copyright Act. On the other hand, Lindor cites to case law and to law review articles suggesting that, in a proper case, a court may extend its current due process jurisprudence prohibiting grossly excessive punitive jury awards to prohibit the award of statutory damages mandated under the Copyright Act if they are grossly in excess of the actual damages suffered....."-Hon. David G. Trager, Senior District Judge, Eastern Dist. New York, November 9, 2006, UMG v. Lindor, 2006 U.S. Dist. LEXIS 83486, 2006 WL 3335048"'[S]tatutory damages should bear some relation to actual damages suffered'....(citations omitted) and 'cannot be divorced entirely from economic reality'". -Hon. Shira A. Scheindlin, Dist. Judge, Southern Dist. New York, August 19, 2008, Yurman v. Castaneda"The Court would be remiss if it did not take this opportunity to implore Congress to amend the Copyright Act to address liability and damages in peer to peer network cases.... The defendant is an individual, a consumer. She is not a business. She sought no profit from her acts..... [T]he damages awarded in this case are wholly disproportionate to the damages suffered by Plaintiffs." -Hon. Michael J. Davis, District Judge, Dist. Minnesota, September 24, 2008, Capitol v. Thomas"If there is an asymmetry in copyright, it is one that actually favors defendants. The successful assertion of a copyright confirms the plaintiff's possession of an exclusive, and sometimes very valuable, right, and thus gives it an incentive to spend heavily on litigation. In contrast, a successful defense against a copyright claim, when it throws the copyrighted work into the public domain, benefits all users of the public domain, not just the defendant; he obtains no exclusive right and so his incentive to spend on defense is reduced and he may be forced into an unfavorable settlement." US Court of Appeals, 7th Cir., July 9, 2008, Eagle Services Corp. v. H20 Industrial Services, Inc., 532 F.3d 620"Customers who download music and movies for free would not necessarily spend money to acquire the same product.....RIAA’s request problematically assumes that every illegal download resulted in a lost sale."-Hon. James P. Jones, Dist. Judge, Western Dist. Virginia, November 7, 2008, USA v. Dove